Sugar mills fret as prices plunge of sugar and molasses

Sugar mills fret as prices plunge of sugar and molasses

Sugar mills’ revenue and profit are likely to be under pressure in the ongoing crushing season (the current sugar year, 2017-18, formally began on October 1), after recovering marginally in the 2016-17 season.

There has been a sharp decline in their product prices, following estimates of higher cane output.

Seasons 2014-15 and 2015-16 were bad for profitability; things improved in 2016-17 as many large mills showing a rise in net profit, following estimates of lower sugar production. There was s sharp rise in the prices of sugar and molasses, to a peak of Rs 36-37 a kg and Rs 8,800 a tonne, respectively. Prices of both did drop subsequently but their average realisation remained substantially higher than the cost of sugar production.

This year, however, the scenario has again turned against mills, with a fall in prices of both sugar and molasses. “At the current prices, mills are going to incur losses this year. The government is thinking about 120 crore consumers, putting five crore cane farmers at risk. But, once these farmers stop producing cane, there would be the huge scarcity of sugar and increased reliance on import. The government needs to protect cane farmers’ interest,” said Sanjiv Babar, former managing director of the Maharashtra Federation of Cooperative Sugar Factories.

Source: business-standard:Published on 2017-12-05